Suppose Canada reduces a tariff on imported solar panels from 20% to 5%.We would expect to observe

Question

Quizplus · Accepted Answer

By reducing the tariff on imported solar panels, the cost of importing solar panels will decrease and thus, the demand for solar panels will increase. This will lead to an increase in the number of solar panels imported into Canada. Therefore, option D is the correct answer. Options A and B are incorrect because a reduction in tariff will reduce the cost of production and the government's revenue from tariffs will decrease. Option C is also incorrect because an upward shift in demand curve would happen if the cost of production or income of consumers increases, which is not the case here. Option E is also incorrect because a downward shift in demand curve would happen if there is a decrease in the income of consumers, which is not the case here.

Suppose Canada Reduces a Tariff on Imported Solar Panels from 20